Category Archives: Foreclosures

We need more of our homes for sale to benefit individuals, not banks via foreclosure. Foreclosures are putting banks in possession of too many properties being sold and those that once were homeowners become renters. This decreases home values and increases rent everywhere and people still struggling to keep their homes are spending all their money on living expenses and not on other things which is what causes the economy to suffer. So for all you homeowners that have fallen behind on your mortgage; HUD has a possible solution.

HUD’s program opening right now is called Emergency Homeowner’s Loan Program (EHLP). I would call it H.E.L.P (Homeowner’s Emergency Loan Program). They did it before earlier in the year but the deadline was in July; now they have decided to reopen the program and accept new applications until September 15, 2011 because HUD believes there are enough funds to help more people. Funding comes from the Dodd-Frank Wall Street Reform and Consumer Protection Act. You can read about it in this recent article in DSNews.com.

To be eligible you must be a homeowner who is struggling to pay due to involuntary loss of income, such as a lay-off, salary reduction, or a medical condition. A list of required documents and instructions to apply can be found at FindEHLP.org or you can click on this link to the HUD site describing the program. There are also HUD housing counselors that you can talk to for further help.

Hurry, because time is running out soon and it is a first come-first-serve basis. We are lucky that Washington is one of the 27 states that is able to participate in this program. This could be one more tool used to preventing more foreclosures and healing our economy.

Most of us have heard the term “housing bubble” and we know it has something to do with risky lending, contribution to the economy slump, and why the housing prices have dropped. But do we really understand what it was, how it worked, and why it hurt us? Here is the researched I have found.

So, actually this chart is from someone else’s research but I believe it to be pretty accurate considering the sources used. As it clearly shows, the American income has been pretty stable for awhile, not growing but not decreasing either. Notice, however, the constant increase in oil, an indicator to economy health. If oil goes up, so does the cost of everything else we purchase in stores because the cost of transportation is higher. Therefore, logically, we should not be increasing our expenses in other areas as well, but look again and notice that was not the case. In fact it was the extreme opposite, thus the bubble. More people buying more house than they can afford.

“It is bad for them (buyers), it is bad for the housing market and it is bad for the economy. The extra money that is being used to pay for housing is not going to other areas of the economy…the underlying factor in your ability to repay is your income.” – BergenJerseyForeclosures.com

In order for the economy to get back on its own feet, our price-to-income ratios have to decrease to about 3/1, that is the home value is 3 times more than annual income, this has not been the case, and sadly still isn’t. According to a recent study by Zillow noted in DSNews.com “Eighty-five of the 130 metros were still above their historic averages, while 42 were below.”

We are still in trouble, this is what we need to start doing… live within our means! Just because someone will let us increase our debts and take on huge payments doesn’t mean we should. We need to be smart with our money and budget because it affects our lives and our economy.

“I think it makes more sense to buy as much house as you need, keeping the conventional debt-to-income ratios as ceilings.” – GetRichSlowly.org. Everyone should be able to pursue the American dream and own a home, and with prices still dropping, most of us actually could with a consistent income. However, let’s stick with humble beginnings and just get what is affordable, not what is extravagant.

AOL has launched a new search tool for finding homes, market values, or even a place for rent! AOL RealEstate has made it a goal to be “…a singular destination where users can be both inspired and empowered in their search for a new home.” – Jay Kirsch, VP of AOL Money and Finance in this article in DSNews.com.

I decided to check it out myself to see if it was really any better or any different than real estate search tools online. The main ones I have used in the past are TheMLSOnline.com and Realtor.com, there are many others, many of which operate very similarly. This one however, really impressed me.

First, I searched for property values in my area (by zip code). It gave me a map with tags to almost every single home on the map indicating estimates of that property’s value. If I clicked on a property it gave me basic stats and told me if it was on the market now or had been recently. I even found my house with its proper value assessment at the price I paid and it was indicated that it was sold. It even knew the date it was sold, something I had already forgotten.

Then, surprisingly it listed other houses in the nearby area that is for sale and I found a home up for auction with a starting bid at …..$25,000! This is a 3 bedroom, 1 bathroom home with a two car garage on a lot the same size as mine and its starting bid is at $25,000. Amazing! If only this tool existed when I was searching for my home. I actually had fun navigating around; the site is extremely user-friendly. I encourage anyone who will ever move again to check it out, whether you are just curious about the market in a specific area or perhaps even looking to rent still, this site has it all.

So my husband and I are buying our first house in south King county. We never thought we could afford a house and when we decided to move we thought we were going to buy a mobile home, but after learning about the cost of space rent and the home mortgage combined being the same as a mortgage for a house, we tried for a loan. Low and behold we qualify for just about enough to get a little, three bedroom, low-end foreclosure. So we looked around, made an offer, got turned down, looked some more, made another offer, got turned down again, and again, until on the fourth offer, we finally were accepted and entered into a sale-agreement. There we were, excited and disappointed on this roller coaster ride of seeing all these houses and finding “the one” and then we’re rejected. Now we can just be relieved to settle into this one that accepted our offer. It’s a little like being engaged and the day is less than a month away. Only in this deal you get to have a list of all the things wrong ahead of time and you are responsible for fixing all these issues prior to finalizing the purchase. In what kind of economy is the buyer responsible for making repairs to a damaged product before the sale of the product?

The problem is the big named bank that owns this house (like many other bank owned properties) has not done anything to the property the entire time it has been on the market, which has been months. No one has even cleaned up after the previous resident (who apparently had several dogs) let alone investigate or fix any necessary repairs. Because we are first-time homebuyers we are buying with an FHA loan, which requires us to buy a home that meet certain living requirements, such good roof, floors, plumbing, etc. Rather than the bank paying to make necessary repairs in order for the loan to be applicable for the purchase, the bank would rather let the house sit there, even after reducing the sale price twice already. Therefore, the only option we have is to make repairs ourselves so it will pass the inspection and qualify for our loan. This has been both exciting to choose the new flooring to replace bathroom linoleum when the floor is fixed as well as stressful at the thought of putting all this effort and expense into a house that we have no guarantees will be ours.

After all our anxiety levels get back to normal, we hopefully will be able to move in and enjoy the fruits of our labor. Now that we are buying in a market that is “buyer’s paradise” we may be acquiring instant equity, because part of the ups and downs of home buying also involve the down prices and the upward investment.

Now may be the best time to buy more than ever. Foreclosures are down 11% from last year. Problematic loans are at its lowest in three years. This means that the housing market is beginning its long haul towards the healthy and stable market that it once was. At the current rate of sales, it may take four years to remove all current foreclosures/ delinquent loans out of the market, but with fewer new loans going bad and fewer new foreclosures, the vast spread of great deals is soon to be snatched up. Here are some factors contributing to curbing delinquent loans…

…More quality loans are being given, making it more realistic for buyers to keep their mortgage commitments. Loan modifications give homeowners more options in keeping their homes and are becoming more frequent. Also, fewer new loans are defaulting than in more recent years. Check out this article from USA Today on this issue.

So, all this being said, there are surely those of you that are thinking about taking your pick while the picking is still good. If so, congratulations, because it has become easier now that ever to get started. Lenders have record low interest rates and there are many public resources available to help homebuyers from down payment assistance to closing cost assistance.

A great place to start may be on the Fannie Mae website, Homepath.com. It is a searchable listing website with many foreclosed properties throughout the country. This website is particularly helpful to buyers who want to learn more about the options for purchasing a home as well as offering special incentives provided specifically through Fannie Mae. The most recent incentive for buyers that was offered was for Fannie Mae to have closing costs covered, up to 3.5% of purchase price, and provided not to just first time homebuyers but to anyone who is making a purchase to occupy. Although this is currently an expired offer there are others. Whether you are buying your first or eighth home, you can make an offer on a Fannie Mae house within its first fifteen days on the market without investor competition. Investor offers will not be considered by Fannie Mae until after this fifteen day First Look incentive. However, for those that are investors, Fannie Mae also offers deals with an unprecedented 10% down payment versus the more common 20% down.

I conducted a quick search for homes in King County, Washington, for 3bd 2ba under $100k and found eight properties, four had the status “under contract” and four with active status. I tried again with the same criteria and area only under $120k and found 14 with six “under contract”. The 8 active listings ranged in price from $118k down to $66k! If you’ve been waiting for a buyer’s paradise, here it is, but for a limited time only.